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Speaker 2: Expert and Uncertainty and the Distinctions to risk is Jeff
Speaker 2: for you. We're thrilled that he could join us this morning.
Speaker 2: Of course, with being white wealth, he is senior. He
Speaker 2: A strategists. Jeff, how do you define how do you
Speaker 2: identify the uncertainty right now?
Speaker 3: Well, it depends on which asset class you are asking about, right.
Speaker 3: So if I look at foreign exchange options, for example, yes,
Speaker 3: I'm uncertainty in the front end judging by implied volatility,
Speaker 3: but going further down the curve doesn't look like it right, say,
Speaker 3: a lot of frontend on certainty. But the market seems
Speaker 3: to think that stuff will sort itself out.
Speaker 4: I'm not so sure about that, so.
Speaker 5: Jeffery, I mean, you know, we've been talking about the
Speaker 5: strength of the US exceptionalism over the last I don't
Speaker 5: know a year two years here, and that's been reflected
Speaker 5: in a strong dollar. What's the word order look like
Speaker 5: right now, and you look at the currency markets, where
Speaker 5: is the opportunity.
Speaker 3: Well, the biggest repricing certainly has been in the Euro
Speaker 3: and I would add, you know some other low yielding
Speaker 3: European exporter currencies, you know, like the Swedish krona, check runa,
Speaker 3: you know, Swiss Frankliner for example, Denmark, even they're going
Speaker 3: to benefit from any restructuring in the Eurozone and a
Speaker 3: big fiscal push. So that's where the opportunities is. And
Speaker 3: because the dollar has enjoyed such a large rate differential
Speaker 3: over these currencies, people are happy to sit on long
Speaker 3: US dollars and sit on the carry trade. But now
Speaker 3: with that easying being priced back in, clients are not
Speaker 3: so sure. So these carry trades, these hedges, they are
Speaker 3: being unwound. So as much as I'd like to call
Speaker 3: the top in the Euro right now, given it's gone
Speaker 3: against my view looking at the size of those hedges,
Speaker 3: I'm still not so certain.
Speaker 5: So in the Euro here, I mean again, several weeks
Speaker 5: ago we saw Germany make a really big, big pivot
Speaker 5: there and talk about investing in their infrastructure, investing in
Speaker 5: their military, suggesting a little bit of a well actually
Speaker 5: a lot of a change in their bias. Is there
Speaker 5: still upside to the euro? We were trying to get
Speaker 5: the euro to parody for Tom Keane, but that's not happening.
Speaker 3: So, you know, I would that was my target for
Speaker 3: last year and early this year, and given what the
Speaker 3: ECB has said as well about inflation, probably not like
Speaker 3: Peter falling back to target.
Speaker 4: And then the future that is going to be.
Speaker 3: A difficult I still think we end the below where
Speaker 3: we are right now close to one o five rather
Speaker 3: than one point fifteen or so. The proof will be
Speaker 3: in the delivery and this is going to take a
Speaker 3: long long time, but the outlook is positive, and I
Speaker 3: would conceive that.
Speaker 2: Jeffer you I'm hearing from a lot of other people
Speaker 2: what I'm hearing from you. Somewhere over the horizon, there's
Speaker 2: a bet that everything comes down, maybe we normalize and
Speaker 2: get back to you know, stock market gets a bit
Speaker 2: out and everything's fine as well. My problem is I'm
Speaker 2: reading the globe and mail up in Toronto or lamand
Speaker 2: in Paris, and I see massive tear of tension. How
Speaker 2: do you fold the politics and the Trump politics into
Speaker 2: your finance analysis.
Speaker 4: So going back to an earlier point.
Speaker 3: Yes, it stabilizes, but it won't stabilize at the level
Speaker 3: that we were at. Right, So euro dollar trend stabilization
Speaker 3: and neutral rates, it's not going to be back at parity.
Speaker 3: It's not going to be based on growth differentials that
Speaker 3: we thought with the case in the past Chinese equity
Speaker 3: markets people rendered uninvestable back in the day, not so
Speaker 3: much in the future. So Canada, what's going to be
Speaker 3: the nature of the economy. So yes, we will stabilize,
Speaker 3: but at a different level, subject to other changes that
Speaker 3: are taking place right.
Speaker 2: Now, quantify our parity and euro is stabilization. I don't
Speaker 2: want to pin you down here, it's unfair, but are
Speaker 2: we doing is the new parody at one of five
Speaker 2: or a one to ten.
Speaker 3: So we look at exchange rate in real terms, right,
Speaker 3: so you look at growth differentials and you look at
Speaker 3: inflation differentials. It will be higher compared to where we
Speaker 3: were because if this works in Europe, and that is
Speaker 3: a big if, then trend growth will be higher. Why
Speaker 3: because productivity will be higher. The competitivist that Dragi court
Speaker 3: wal last year, that letter cored for last year, that
Speaker 3: may actually deliver demographics will be harder. But if productivity
Speaker 3: is higher, then trend growth will be higher and that
Speaker 3: means a higher real Europe.
Speaker 2: Or should we get you a few in trouble with
Speaker 2: compliance to this? Yeah, let's let's do it. Jeff you
Speaker 2: this is way off the remit, but you're so good
Speaker 2: at this. We're going to ask. Mario Draghi of Italy
Speaker 2: was a techno crat is Mark Kearney of Ottawa and techno.
Speaker 3: Cred So that would be the market characterization. But let's
Speaker 3: see what else he can do. You can be a
Speaker 3: technocrat and also a political leader who says these two
Speaker 3: are exclusive. And Mario Draghi was a political leader as well,
Speaker 3: so he led Italy for those two years. But of
Speaker 3: course under a technocratic mandate. So let's wait for the
Speaker 3: elections to see what the manifesto from the Liberal Party
Speaker 3: will be. What kind of a mandate he will run under,
Speaker 3: I assume be quite different compared to what Mario Dragi
Speaker 3: run under. But ultimately can he deliver for the Canadian economy?
Speaker 3: Can can he the German terms restructure the Canadian economy
Speaker 3: so that it is less perhaps dependent on two way
Speaker 3: trade south of the border.
Speaker 4: That will be the challenge for.
Speaker 5: Him, Jeffrey, just in a world of that we're all
Speaker 5: experiencing here over the last couple of months and over
Speaker 5: the last several weeks in particular, in your world, when
Speaker 5: you talk to your clients, what are they Are they
Speaker 5: looking for safety? Are they looking for just opportunities? What
Speaker 5: are they doing here in this world where nobody seems
Speaker 5: to know what's going to happen in the next minute,
Speaker 5: the next hour.
Speaker 3: So again those two are not mutually exclusive, right, So
Speaker 3: some safety names potentially are the opportunities as well. So certainly,
Speaker 3: and we all know, and it's showing up in our
Speaker 3: flow data. There has been a wide gap in US
Speaker 3: equity holdings versus the rest of the world. So we
Speaker 3: anticipated that to converge, you know, maybe not so speedily
Speaker 3: over the last few weeks or so, but that is happening.
Speaker 3: So there's a lot of cash on the sidelines right now.
Speaker 3: Where will that go? Do I put it in Asia
Speaker 3: with a China theme, the AI theme, or do I
Speaker 3: go in the europe reinvestment theme. But China is openly
Speaker 3: saying there is an inflation issue, a demand issue, So
Speaker 3: you've got to pick your sectors very very carefully. So
Speaker 3: the opportunity and safety, I would add in places where
Speaker 3: it's basically high earnings or high earnings growth potentially and
Speaker 3: also less exposure to what's going on right now, and
Speaker 3: also based on domestic public investment, the sodal sectors I
Speaker 3: want to be in.
Speaker 2: We start strong today on Bloomberg Surveillance. We do it
Speaker 2: with Jeffrey you of B and y Well. Thrilled that
Speaker 2: he could be with us. We welcome all of you
Speaker 2: on your commute across nation, across Canada. Good morning on
Speaker 2: Apple car Play. Andreid'o on YouTube, Paan, I am absolutely
Speaker 2: humbled by the growth out and Bloomberg Podcasts. Subscribe to
Speaker 2: Bloomberg Podcasts, and you know, we were just absolutely thrilled
Speaker 2: by it. And in particular good Morning, I just featured,
Speaker 2: I just featured Mumbai, he did, and the build out
Speaker 2: here Ray YouTube. I have an advisor on this, you
Speaker 2: do you know they said, they said, Tim, you're such
Speaker 2: a fossil, you got to have an advisor. So I
Speaker 2: have a Ray YouTube, and Ray YouTube says India is happening.
Speaker 2: So good morning and good evening, I should say, in India,
Speaker 2: Jeffy you with us with B and y Well Jeff,
Speaker 2: I look at China in the sort of to me,
Speaker 2: if I was speaking with President Trump and his fierce advisors,
Speaker 2: I would say, expect the unexpected. And if we export
Speaker 2: Chinese deflation or massive significant disinflation, are we under gaming
Speaker 2: where inflation is going to be in two, three, four years.
Speaker 3: So that's where the Chinese growth strategy up ahead is
Speaker 3: going to be really interesting. I would say, firstly, we're
Speaker 3: going to be seeing of China exporting disinflation right because
Speaker 3: inflation is expected to pick up. But secondly, this fiscal push,
Speaker 3: the deficit at four percent, where is it going to
Speaker 3: be concentrated. In the past, it's oh, it's infrastructure and
Speaker 3: real estate. It's going to help commodoties. That's not going
Speaker 3: to be the case this time around. Let's help the household,
Speaker 3: the consumer. If the household consuit of household consumption picks up,
Speaker 3: then the again consumer staples or even the consumer discretionary. Know,
Speaker 3: those are the areas where we can see reflation as well.
Speaker 3: This was expected in twenty twenty three, twenty four when
Speaker 3: China reopened, didn't really happen, But now better late than
Speaker 3: never could that happen. So I would say less deflation
Speaker 3: for sure, but can it be inflationary? Can it drive
Speaker 3: earnings upside in global consumer discretionary exposed to China. That
Speaker 3: is going to be the big challenge, Jeffrey.
Speaker 5: I mean, you know, I look at Ali Baba as
Speaker 5: my personal proxy for investor appetite for China.
Speaker 2: It might be, it might be exactly.
Speaker 5: I kind of feel like when Ali Barber, however, Ali
Speaker 5: Bobin trades, that's kind of a good proxy for how
Speaker 5: the world's viewing investment opportunities in China.
Speaker 4: It's up sixty.
Speaker 5: Percent this year. What's changed in China if anything, to
Speaker 5: bring it back to the forefront for maybe investors see
Speaker 5: as an option here.
Speaker 3: Right, So growth, we go back to the growth element,
Speaker 3: and for companies what matters, right margin? Can there be
Speaker 3: margin expansion? So can AI deliver the productivity growth and
Speaker 3: the compessimist gains, They will really boost earnings via margin expansion,
Speaker 3: and I think that's what's being priced near right now.
Speaker 3: So but I have to pivot back to the household. Ultimately,
Speaker 3: the final demand has to come from the household, you know,
Speaker 3: maybe directly from the government, but otherwise. But given these
Speaker 3: Chinese and consumers communication services companies, they really are in
Speaker 3: every aspect of household consumption. So that's where we hope
Speaker 3: the growth can be. Can it translate in high earnings
Speaker 3: and employment? I think that's what the government is hoping for.
Speaker 3: It's early days after the NPC. So far there's money
Speaker 3: on the table, and I would stress participation from international
Speaker 3: investors is very very light right now. We've seeing that
Speaker 3: in our data, we're seeing it in official data as well,
Speaker 3: so there is an opportunity there in terms of allocations.
Speaker 3: If you believe in the story.
Speaker 2: Jeff, you when you were at LC, there was a
Speaker 2: basic statement on Germany is some form of you know,
Speaker 2: to be brought about it a non American experiment. All
Speaker 2: of a sudden, it sounds like they're goosenomenal GDP. Do
Speaker 2: you actually believe Germany politically, and here's the keyword, folks,
Speaker 2: culturally is ready for a more Anglo American economy.
Speaker 3: Right, I think it is. Let's just say what prompted
Speaker 3: this cultural change? Was it something out of their own
Speaker 3: volition or something from outside? I think that is a
Speaker 3: political debate perhaps worth having. But then again, looking at
Speaker 3: Europe in general, if it often does respond better to
Speaker 3: external challenges, and I think we are seeing that play
Speaker 3: out this time around as well.
Speaker 4: So yes, there is a change.
Speaker 3: There is a change at least in the political culture,
Speaker 3: in the dynamic, and we're seeing that with Metz.
Speaker 2: One final question, what are you hearing from B and
Speaker 2: Y clients?
Speaker 3: So b Andy clients are again looking for opportunity, safe
Speaker 3: opportunities as stated earlier, so they are looking at their
Speaker 3: overall exposures. I wouldn't say there's too much conviction in
Speaker 3: one direction, you know all the other and we're seeing
Speaker 3: that in our underlying flows right now. But to start
Speaker 3: off with, certainly we are seeing some dollar positions, some
Speaker 3: dollar longs and being taken off, or they're reducing their
Speaker 3: hedges on overseas assets. Is the next step mass rotation
Speaker 3: out of the US into other markets.
Speaker 4: We're not seeing that yet. Home buyers are strong.
Speaker 3: Take Europe for example, it's being driven by European investors,
Speaker 3: not global investors. Will that change? I think that's the
Speaker 3: ass allocation story for the year.
Speaker 2: Jeffer, you with B and why Paul, that's what we
Speaker 2: call a seven am.
Speaker 5: Call exactly on the street and offices in London there
Speaker 5: that is a five minute walk from Bloomberg. I think
Speaker 5: next time, Jeffrey can walk over to the Bloomberg What
Speaker 5: do you think, I think the studio and doing that.
Speaker 5: It's right around the corner.
Speaker 2: Jeff thank you so much getting us started here.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 2: It's a perfect time that if you're out of a job,
Speaker 2: where do you go? And you go to Zip Recruiter.
Speaker 2: They're chief economist, one of our favorites. Julia Pollock joins
Speaker 2: us right now. Julia, Zip Recruiter, have you seen a change?
Speaker 2: Can you give us wisdom or perspective on this new
Speaker 2: job market? With so many people so quickly out of work, it.
Speaker 6: Is a slow job market. That is what I'll say
Speaker 6: about that. The well, there was a big poppet optimism
Speaker 6: in the fourth quarter. Our first quarter surveys of twenty
Speaker 6: eighty five are now wrapping up, and what we're finding
Speaker 6: is that that bump has disappeared. Job Seekers are saying
Speaker 6: that the largest numbers ever that their job search is
Speaker 6: going poorly. We have the largest share of job seekers
Speaker 6: ever with zero offers, job seekers of lost confidence that
Speaker 6: there are plenty of jobs available. So we have the
Speaker 6: largest share of job seekers ever, over forty percent saying
Speaker 6: that they have they're not confident at all that they
Speaker 6: are jobs available. So our first quarter survey is a
Speaker 6: somewhat gloomy one.
Speaker 5: I'd have to say, and Julia, what do you think
Speaker 5: has changed here? Is it just some of the uncertainty
Speaker 5: that a lot of folks in the economy are feeling today,
Speaker 5: is we try to figure out how these TIFFs and
Speaker 5: immigration changes may impact kind of the environment.
Speaker 6: So I see a continuation of what was happening before. Right,
Speaker 6: We've had a two year slow down and hiring okay,
Speaker 6: And I think that excessive spending, high inflation, high interest rates,
Speaker 6: they have a very long hangover. And many companies were saying,
Speaker 6: let's survived till twenty five, and they were hoping that
Speaker 6: inflation would be conquered and that interest rates would come
Speaker 6: back down to the normal by twenty twenty five. That
Speaker 6: has not happened, so we still have inflation on so
Speaker 6: we still have interest rate uncertainty, and now an additional
Speaker 6: we also have policy certy. So that is the picture
Speaker 6: Bloomberg surveillance.
Speaker 2: Folks, so commute across the nation from Julia Pollock's left
Speaker 2: coast over here to ninety nine and one FM in Washington,
Speaker 2: ninety two to nine FM up in Boston. Good Morning,
Speaker 2: Bloomberg eleven three to zero and a cold spring morning
Speaker 2: here in New York. On YouTube, subscribe to Bloomberg Podcast.
Speaker 2: It's a new way to discover us. Find that again
Speaker 2: at YouTube. Thank you for googling YouTube for their support, Julia.
Speaker 2: When you just give me the litany of how difficult
Speaker 2: it is to get a job. Your job at ZIP
Speaker 2: recruiter is to pull that over to the unemployment rate.
Speaker 2: We're having a raging debate. When is the when of
Speaker 2: say four point eight percent unemployment? Is the when of
Speaker 2: that this year? Or do you go out further into
Speaker 2: next year?
Speaker 6: It possibly won't get there. And that's because we are
Speaker 6: in the middle of peak sixty five, with the with
Speaker 6: the largest numbers of Americans turning sixty five every year,
Speaker 6: five years of ay boomers aging out like this and
Speaker 6: becoming eligible for Medicare and for retirement, and then we
Speaker 6: also have immigration falling steeply. It's one of the first
Speaker 6: things the President did was sign an executive order ending
Speaker 6: as Island programs for workers from Afghanistan Nico Lagua Hate.
Speaker 6: So those programs together accounted for about five hundred thousand
Speaker 6: immigrant inflows a year, and many of those workers got
Speaker 6: employment pieces right away. That stopped right away. Other kinds
Speaker 6: of border crossings have stopped, and so the number of
Speaker 6: people you need to be absorbed by the slave market
Speaker 6: keeps falling, and so perhaps even with slow hiring, we
Speaker 6: won't see an object in unemployment.
Speaker 2: Julia, Thank you so much, Julia Pollack. That was riveting folks.
Speaker 2: The beginning of that conversation with actually what they're seeing
Speaker 2: it ZIP recruiter was extraordinary. About a Tona's change, I'm
Speaker 2: going to rephrase the tone has changed. And what I
Speaker 2: saw there, Paul was if you're out looking for a job,
Speaker 2: the percentage of people with zero offers.
Speaker 4: Ye.
Speaker 2: I think you know she's going, you know, Julia Pollock fast,
Speaker 2: but I think that's what I got out of it.
Speaker 2: Is well.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: We went out on this morning of wine and cheese
Speaker 2: fromage in Champagne tariffs, and we tried to find someone
Speaker 2: who's tried every liqueur that mister Arnaud has at LVMH
Speaker 2: joining us now Robert Harmatz's public service to the nation,
Speaker 2: just back from Paris, and of course with all of
Speaker 2: this history, getting us at least halfway back to McKinley.
Speaker 2: Ambassador Armitz, thank you for joining us this morning. You
Speaker 2: got a piece of chalk in your hand. You're up
Speaker 2: at Toughs. What do you say into the diplomacy students
Speaker 2: at Toughs University this morning?
Speaker 7: Well, I'm saying basically that the process of reaching some
Speaker 7: sort of compromise moved a little bit ahead in the
Speaker 7: last few days in the discussions between the US and
Speaker 7: Green But the critical part is that Putin started this war,
Speaker 7: and Putin is a critical element in reaching a truce
Speaker 7: and reaching a conclusion of full peace. And it appears
Speaker 7: to me that what he is showing us by wearying
Speaker 7: his military fatigues and his rhetory is that he does
Speaker 7: not seem to be willing to do any of the
Speaker 7: things needed to reach a compromise on the truth or
Speaker 7: on a piece. And the question is what is the
Speaker 7: United States going to do visa e Putin? We've said
Speaker 7: we President said he trusted him. He is now demonstrated
Speaker 7: he is going to do his own thing. He's going
Speaker 7: to be after In the Great and Peter the Great,
Speaker 7: and a compromise with the United States or Ukraine does
Speaker 7: not seem to be in his cards, which means there's
Speaker 7: a major diplomatic problem with him, and we're going to
Speaker 7: have to address that.
Speaker 2: There's no way around the distinction here, Paul. For me,
Speaker 2: is a diplomacy of Hormance or Kissinger or others. There's
Speaker 2: a lot of silence. There's a lot of quiet, and
Speaker 2: is Robert Hormett states there were in a very verbal diplomacy.
Speaker 5: Right now, it seems like a bob So how do
Speaker 5: you think this is going to play out over the
Speaker 5: next several weeks and months as it relates to Ukraine,
Speaker 5: Russia and US, and I guess not the Europeans.
Speaker 7: Well, I had a long talk with the Europeans. That's
Speaker 7: another diplomatic issue that has to be confronted. The Europeans
Speaker 7: feel that they have been pushed aside, that they've not
Speaker 7: been included in the conversations. And the whole history of
Speaker 7: the United States strategically after World War Two has been
Speaker 7: to work with our allies. The one thing we have
Speaker 7: that China and Russia both do not have our strong allies,
Speaker 7: and we're alienating them, and we're putting them, sidelining them.
Speaker 7: And I think this is going to weaken us in
Speaker 7: the long run. Viz A VI, Putin and visa VI
Speaker 7: the rest of the world, and very important, the confidence
Speaker 7: and our reliability to support our allies is diminished quite dramatically.
Speaker 7: All the Europeans I talked to said, and we have
Speaker 7: confidence in you, And I said, well, we have a
Speaker 7: history of being with you. And they say, if you're
Speaker 7: having a fight with your best friend and neighbor, Canada,
Speaker 7: how can we rely on you to support us, particularly
Speaker 7: the smaller Estonia Latvia Lithuania. Are you just gonna toss
Speaker 7: them to the side. So credibility is on the line here.
Speaker 2: Howard Latnik with us earlier the Secretary of Commerce and
Speaker 2: now Ambassador Hormance with this of course always affiliated with
Speaker 2: the Kissinger associates will speak with the ambassador. Jess Metton
Speaker 2: will get us to the nine o'clock hour here on
Speaker 2: exequity markets.
Speaker 5: Paul so Bob, how should we think about mister Putin?
Speaker 8: Here?
Speaker 5: One could argue he could come out of this stronger
Speaker 5: than ever. And is that something that the Europeans that
Speaker 5: you spoke with their con Yes.
Speaker 7: I think that we underestimate how bad his economy is
Speaker 7: at this point and how many people he's lost. The
Speaker 7: only trouble is he lives in an information bubble. In
Speaker 7: authoritarian government's information rarely moves up, particularly bad information, so
Speaker 7: he may not have a very good idea of actually
Speaker 7: what's going on in the battlefield. And a lot of
Speaker 7: Russians only get information from state sources, so they may
Speaker 7: not know. But the economy is in terrible shape, a
Speaker 7: lot of jobs have been lost, a lot of very
Speaker 7: good people have left. On the other hand, he does
Speaker 7: have nuclear weapons, and if we give him a truce,
Speaker 7: he's using this truth to further extend his power and
Speaker 7: his devastation in Ukraine, so that the Ukrainians are losing
Speaker 7: by the truth, even though we've pushed them into it,
Speaker 7: and we haven't pushed Putin to a very great degree
Speaker 7: at all little more sanctions. But he's going to be
Speaker 7: the one who's going to have to do this, and
Speaker 7: we're going to have to come up with a strategy
Speaker 7: to get him to do it. If he doesn't, then
Speaker 7: Europe feels even more and more vulnerable.
Speaker 2: Your expertise in your wonderful book from over a decade
Speaker 2: ago is a basic linkagure of our domestic economy and
Speaker 2: our strength as America with our the way we project
Speaker 2: on a foreign basis. And I don't want to go
Speaker 2: in do we get Erring Tedesky coming up in the
Speaker 2: next hour from the Yale Budget Lab. I don't want
Speaker 2: to go into fiscal policy. But this is the arch question.
Speaker 2: I think all of our listeners and viewers want to know.
Speaker 2: Robert Hormats on your study of populism. So there was
Speaker 2: William Jennings, Bryan, there was Huey Long in the nineteen thirties,
Speaker 2: maybe other populous along the way. Do you look at
Speaker 2: Trump policy, the Trump phenomenon, the Trump foreign policy, tariffs
Speaker 2: and what we're talking about here is a one off
Speaker 2: that the nation moves beyond after his public service, or
Speaker 2: is there a new permanence here to the populism of
Speaker 2: the Grand Old Party.
Speaker 7: Well, I think the populism is going to be with
Speaker 7: us for a period of time because there is income
Speaker 7: inequity in this country. A lot of people feel left
Speaker 7: behind by globalization and by technology. And I think you're
Speaker 7: seeing this in other parts of the world as well,
Speaker 7: that there is to This is not a one shot phenomenon.
Speaker 7: I think this kind of populism is going to be
Speaker 7: with us, and you're seeing it in Germany with the
Speaker 7: Alliance for Deutschland that did very well, sort of very
Speaker 7: ultra conservative populism is.
Speaker 2: The Washington consensus, Let's be honest. I think I'm part
Speaker 2: of it. I'm certain Robert Hormance is part of it.
Speaker 2: Did we blow it because we did not set up
Speaker 2: a structured labor project like Germany did to protect labor
Speaker 2: rudfully did in two thousand and eight in America with
Speaker 2: a lockeyan individualism said to hell with you down at
Speaker 2: textile jobs in North Carolina. Did we blow it twenty
Speaker 2: years ago?
Speaker 7: Yes, I think we had. We're under the illusion that
Speaker 7: there was a Washington consensus in the country when we
Speaker 7: had the financial crisis, and then when we had COVID,
Speaker 7: where a lot of people didn't get proper treatment because
Speaker 7: they were in poorer areas. We underestimated the fact that
Speaker 7: there was not a good distribution in terms of the
Speaker 7: benefits of globalization. Many people felt it was disruptive that
Speaker 7: technology benefited a lot of people, but a lot of
Speaker 7: people were not included in this. And when it came
Speaker 7: to the financial crisis, the bailout was mostly for the
Speaker 7: banks and a lot of small stores.
Speaker 2: Was the stimulus of the pandemic mostly for the banks?
Speaker 2: As you say it in a broad sense, was it
Speaker 2: for the elite?
Speaker 7: I think the pandemic actually a lot of the stimuls
Speaker 7: went to other people. I think there was distribution. I
Speaker 7: think it was relatively fair. There was a lot, and
Speaker 7: it was not as wells monitors it should have been.
Speaker 7: But after the financial crisis, the financial institutions were the
Speaker 7: big beneficiaries. The little guy in Kansas City or in
Speaker 7: Des Moines didn't feel he was getting his fair shape.
Speaker 2: We'll get one more in here, because they got one
Speaker 2: more before Horbet storms.
Speaker 5: Out of exactly exactly, so, Bob, this is a president,
Speaker 5: this administration that puts America first in seemingly all issues.
Speaker 5: And maybe and a lot of folks support that. Is
Speaker 5: that how Europeans view it. Do they feel like they
Speaker 5: are really on their own at this point?
Speaker 2: Yes, yep.
Speaker 7: I think they feel in part because they themselves became
Speaker 7: to self confidence. Complacency is I think a major problem
Speaker 7: we've had over the last twenty or so years. And
Speaker 7: the Europeans felt they could get their energy cheap energy
Speaker 7: from Russia, the US would protect them from a security
Speaker 7: point of view. They were in effect not really playing
Speaker 7: the role that they wanted to play in the global
Speaker 7: in the global system. There's some very talented people there, mccrawan.
Speaker 7: I saw a lot of these people when I was
Speaker 7: over there. But I think the Europeans came to aly
Speaker 7: too much on the US for their security and didn't
Speaker 7: do enough, too much on others for energy and didn't
Speaker 7: do enough and on technology. They're simply not keeping up
Speaker 7: with what's going on in the US. So they need
Speaker 7: to They want to pull themselves together. They know if
Speaker 7: they want to have a global voice, they have to.
Speaker 7: And I think now if there's one thing that's happened
Speaker 7: is that they want to do this, but they want
Speaker 7: to do it with the backing and the support of
Speaker 7: the United States. They wanted to be allies in the
Speaker 7: United States. They don't want to try to do it
Speaker 7: alone because they don't think that's good for them or
Speaker 7: for the global free world.
Speaker 2: I'm upset. I think there's been a horrific job by
Speaker 2: the media of describing a path that the Rubio family
Speaker 2: of Miami took to get to this country two years
Speaker 2: before Fidel Castro, his mother going back and forth to Cuba,
Speaker 2: you know, just trying to get the family out of Cuba,
Speaker 2: and he growing up with non citizen parents, I believe,
Speaker 2: and really being Rubio is the immigrant. What is your
Speaker 2: counsel to Rubio as Secretary of State given this, Maelstrom.
Speaker 7: I think my counsel would be that his family, and
Speaker 7: my family, and many families of people we all know
Speaker 7: came over as immigrants and helped to build this country.
Speaker 7: And I think that we need to have a fair
Speaker 7: immigration policy. It can't be held or a skelter as
Speaker 7: it has been, but there needs to be a recognition
Speaker 7: that immigrants have been critical, right and remain critical to
Speaker 7: this country at all levels, starting companies and doing a
Speaker 7: regular day work that is critical to our growth.
Speaker 2: How do you respond to the comments Secretary Rubio should resign.
Speaker 7: Oh, I think that's not an answer to anything. I
Speaker 7: think Rubio is a guy who has been involved on
Speaker 7: global strategic and foreign policy issues and is a very
Speaker 7: reasonable choice for that for that job. I do think though,
Speaker 7: that it's important that he have a strong voice, because
Speaker 7: I think he does, from his time on the Hill
Speaker 7: and his background, have an understanding of the global system
Speaker 7: and and and I think that's that's fine. I mean
Speaker 7: Trump should have a choice, and Rubio is a very
Speaker 7: reasonable choice for that.
Speaker 2: This has been hugely beneficial. Ambassador Horr Mattz, thank you
Speaker 2: so much. Robert Hormantz, of course with Golden Sex International
Speaker 2: for years of service under Secretary Clinton to the nation.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 1: us live on YouTube.
Speaker 2: Constance Hunter is so good at economist intelligence tune at
Speaker 2: the EIU that we're really going to take a fiscal
Speaker 2: tack here concepts the fear that all Americans have, Like
Speaker 2: am I going to get a Social Security check?
Speaker 8: In twelve years or or as Kyle Bronner would have
Speaker 8: said years ago, the debt and the deficit are these
Speaker 8: legitimate fears that we have about America's fiscal structure.
Speaker 9: So this is a really great question about fiscal space
Speaker 9: and what allows countries to have some countries to have
Speaker 9: lots of fiscal space, like Japan, and what allows other
Speaker 9: countries to have very little fiscal space like Argentina. Right, So,
Speaker 9: theoretically the United States should have quite a bit of
Speaker 9: fiscal space because we're the reserve currency, because we have
Speaker 9: deep in liquid capital markets, because we're really willing to
Speaker 9: run trade deficits, so we can run finance account surpluses.
Speaker 9: All that is being turned upside down right now, right,
Speaker 9: And if I could just say, you know, I saw
Speaker 9: Secretary of Lutnik on TV just a little bit before,
Speaker 9: and he was talking about two trillion dollars of investment
Speaker 9: coming in. Well, what that means is that we have
Speaker 9: to have a trade deficit. On the other side of that,
Speaker 9: the financial account and the capital account need to balance.
Speaker 9: And what does this have to do with the budget deficit. Well,
Speaker 9: we can again, only run budget deficits if we're willing
Speaker 9: to have a financial account surplus because we're going to
Speaker 9: need foreigners to invest in our currency, which is a
Speaker 9: good thing because we're the reserve currency they want to
Speaker 9: hold dollars. But if we start to erode that in
Speaker 9: all sorts of ways, then our fiscal space shrinks.
Speaker 5: So what is this What is the risk to this economy?
Speaker 5: Do you think with what we're seeing coming out of
Speaker 5: Washington in terms of tariffs, in terms of maybe I
Speaker 5: don't changes in immigration policy, is there a risk to
Speaker 5: this economy stalling?
Speaker 2: Maybe?
Speaker 9: I think there's a risk that we hit stall speed,
Speaker 9: stall speed. Excuse me, And just to get back to
Speaker 9: Tom's point, and when we do have the we do
Speaker 9: have the debt sealing coming up this Friday, we did
Speaker 9: and so and so this perpetual situation where we're where
Speaker 9: we're not in this are we or aren't we going
Speaker 9: to fund the government? Will Republicans and Democrats come together?
Speaker 9: That all that at the margin hurts our fiscal space.
Speaker 9: And then you add all this policy uncertainty. So when
Speaker 9: I look at policy uncertainty certainty indexes, we're at highs
Speaker 9: we had. We're still below the highs of the pandemic,
Speaker 9: but we're at highs. We haven't seen in other normal,
Speaker 9: uncertain periods.
Speaker 2: You're too young to remember this, Paul's too young to
Speaker 2: remember this. But I remember the magic of nineteen ninety two,
Speaker 2: and it was unique, folks. There's lots of think tanks
Speaker 2: in that, and somebody with a lot of money like
Speaker 2: Pete Peterson writes a check the Conquered Coalition, Pete Peterson,
Speaker 2: Warren Rudman, Paul sign. So we lost way, way too early,
Speaker 2: and they invented our concern and they articulated at the
Speaker 2: Conquered Coalition what our concern is over the deficit, And
Speaker 2: what every listener's saying is, we've heard this like a
Speaker 2: broken record since nineteen ninety two. What's different now about
Speaker 2: a catalyst to actually fix this.
Speaker 9: So, just as an aside, I worked on the Paul
Speaker 9: Songa's presidential campaign because of that, because of his stance
Speaker 9: on fiscal policy, and I would say that I am
Speaker 9: definitely of the belief that you want to have you
Speaker 9: want to be spending on the right things that are
Speaker 9: going to yield growth in the future, and we shouldn't
Speaker 9: be running six percent budget deficits this mansion.
Speaker 2: We're going to do this with Thirtie todays shy, the
Speaker 2: variable budget is fourteen percent. I think Paul helped me
Speaker 2: with a math here that means eighty six percent of
Speaker 2: the budget is untouchable, Is that right, Constance Hunter?
Speaker 9: Yes, but I'll tell you I think that there's ways
Speaker 9: to think about cutting costs in healthcare, right, and I'm
Speaker 9: talking using AI, using robotics. There was a great study
Speaker 9: in Japan, which, as you know, has is the preview
Speaker 9: movie by the way, for everybody in terms of demographics,
Speaker 9: fiscal space, everything, right. And so they have all these
Speaker 9: elderly people in nursing homes. They don't have enough staff
Speaker 9: to take care of them, and so they started using
Speaker 9: a number of different types of robotics to help this staff,
Speaker 9: and it reduced costs and improved outcomes.
Speaker 7: Right.
Speaker 9: Itved it reduced injury from the nursing staff that was
Speaker 9: taking care of the patients. It made it reduced injuries
Speaker 9: to the patients. And we need to start thinking about
Speaker 9: how are we going to solve this. Right, if you
Speaker 9: look forward, we need to increase home health aids by
Speaker 9: twenty one percent over the next decade. Now, these people
Speaker 9: make half the median wage. I don't see how we're
Speaker 9: going to do that without increasing wages or using technology
Speaker 9: to help.
Speaker 5: Us, or maybe some immigration discussions there. I mean, yeah, but.
Speaker 9: Even then, I mean these are not you know as
Speaker 9: yes that that's possible, but this, this is there's always
Speaker 9: been resistance to that.
Speaker 4: Yep.
Speaker 5: Absolutely inflation. How big of a risk is that for you?
Speaker 5: For a I say, resurging inflation risk.
Speaker 9: So we think that there obviously will be a step
Speaker 9: level change up as a result of There will be
Speaker 9: a step level change up as a result of tariffs
Speaker 9: that will intersect with demand. Right, So if we have
Speaker 9: the economy weakening because uncertainty is causing firms to hold
Speaker 9: back on hiring, or it's causing consumers to hold back
Speaker 9: on spending, or it's causing firms to hold back on investment,
Speaker 9: right right, if those intersect, right, then those higher prices
Speaker 9: are going to actually cause a bigger slowdown in demand
Speaker 9: and prices a year forward.
Speaker 2: Constants Hunter, thank you so much, particularly for brief us
Speaker 2: out well. That's wonderful vignette there on Paul Sugas as well,
Speaker 2: Thank you much. With the EI at you this morning.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple, Corclay and Android
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Speaker 1: Bloomberg terminal.
Speaker 2: Right now on the newspapers, Lisa, what do you have?
Speaker 10: Okay, we have a big milestone for an American rock band.
Speaker 4: Listen up, chuck in the chips deep chuck you.
Speaker 10: Yes, it is The Grateful Dead celebrating their sixtieth anniversary.
Speaker 10: So in order to celebrate, they're coming out with a
Speaker 10: sixty CD box set of live shows. It's offered May thirtieth.
Speaker 10: Enjoying the Ride, that's what it's called. So word is
Speaker 10: Matt Miller already for you or I.
Speaker 5: Know, I know it's choppy, crazy fan, but.
Speaker 10: It represents twenty show is from nineteen sixty nine to
Speaker 10: nineteen ninety four, sixty hours of music, four hundred and
Speaker 10: fifty tracks in all. It's about six hundred dollars. That's
Speaker 10: the cost of it. If you have a CD player
Speaker 10: and you want to do that, you can get the
Speaker 10: downloads runs you a little bit cheaper. If you want
Speaker 10: to go a little bit cheaper, there's a condensed version
Speaker 10: on CD and vinle two. But it's the way for
Speaker 10: them to celebrate sixty years.
Speaker 2: I can't convey the bootlegism of nineteen seventy, nineteen seventy one.
Speaker 2: You go in, you go to the sinker Toiloggis and
Speaker 2: try to get through the day, and then you knew
Speaker 2: you needed something to get back to the dorm. So
Speaker 2: you go and everything was white. It was like cheap
Speaker 2: white cardboard. And you go in and get bootleg stuff.
Speaker 2: And the only one I know left who has a
Speaker 2: complete nineteen seventy one bootleg catalog is Doug cast no
Speaker 2: one else. My mother threw them out. You know that?
Speaker 2: What do they smell like? Something?
Speaker 4: What is that?
Speaker 2: If we said good morning to Doug Cass who has
Speaker 2: all his original bootlegs. Yeah, I love it. I love it.
Speaker 10: But yes, Matt Miller was very excited about it. It
Speaker 10: came to me this morning, Yes he did.
Speaker 8: So.
Speaker 10: This next one, so this is from the Wall Street Journal.
Speaker 10: LVMH is named Bernardo O's son to lead Italian fashion
Speaker 10: house Laura Piano. So this is an interesting setup because
Speaker 10: he's thirty years old. We're talking about Frederick Arno. He's
Speaker 10: worked in LVMH's watch division since twenty seventeen. He was
Speaker 10: a CEO three years later at twenty five. So a
Speaker 10: Laura Piano. It sells about, you know, two thousand dollars
Speaker 10: sweaters and coats, but it's part of that fashion and
Speaker 10: leather goods section, which is huge for the company. So
Speaker 10: a lot of people are saying it's kind of setting
Speaker 10: him up to be the next in line. I mean,
Speaker 10: people are watching the careers of his five kids very closely,
Speaker 10: so they're saying, this is like a big move and
Speaker 10: some big news.
Speaker 5: It's a threeon euro market cap. It's a big company.
Speaker 2: It's a big, big company. It's really success. I remember
Speaker 2: the day I believe they took out a part of
Speaker 2: Laura Piana and that was in my mind, is an
Speaker 2: amateur the first luxury transaction where everybody just stopped and said,
Speaker 2: are you kidding me? And now you know, twenty years later,
Speaker 2: thirty years later, here's what we is. So he's annoyted
Speaker 2: to be the one of the X number of kids.
Speaker 10: That's what people are saying. But we shall see there's
Speaker 10: five yess success, they will.
Speaker 2: I called it Frederick's people. I said, I said, can
Speaker 2: you come on surveillance? And they said, we're not because
Speaker 2: you call it Lewis Vieuden. I said, well that's how
Speaker 2: I pronounce every day.
Speaker 10: Okay. So the newest cruise offering is now on dry land.
Speaker 10: These are like Royal Caribbean. They bought a seventeen acre
Speaker 10: piece of land on the Bahamas, so it comes with everything.
Speaker 10: But they're saying this is the new trend to go from,
Speaker 10: you know, the the dry land private beach clubs. But
Speaker 10: what the Wall Streeturnal, i mean, the New York Times
Speaker 10: is saying is that there's some kind of backlash behind
Speaker 10: it because the people on the island are saying that
Speaker 10: they're hired to being priced out by foreign investors. It's
Speaker 10: taken away from local, local economy. So that's kind of
Speaker 10: the word and the matter.
Speaker 2: Quickly you go to surveillance correspondent. Cruise corresponded Richard Truman. Richard,
Speaker 2: would you go on a cruise ship that was on land.
Speaker 2: He's going to Europe. He's gone, he's still cruising Europe. Yeah.
Speaker 2: You pick it up in Gibraltar, and you go over
Speaker 2: past Malta and all that, and you end up on
Speaker 2: Cyprus and there's a PLoP up to Istanbul and you
Speaker 2: come back. All right, rich Truman, Thank you for that wisdom.
Speaker 2: Lisa Mateo, thank you. It is the newspapers.
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Speaker 7: You really know how